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SMEs discuss benefits and challenges of e-invoicing and e-identification

‘Less costs for SMEs and opportunity to better reap the benefits of European Digital Single Market? e-invoicing and e-identification are the tools that help entrepreneurs to achieve it’ This question was at the center of a lively debate at the latest SBS Forum on ICT standards for SMEs (Forum).

On the 31st of March, DIGITAL SME organized a Forum event on behalf of SBS; co-funded by the European Commission (EC) and the European Trade Association (EFTA). The latter took place in Cluj-Napoca, Romania during the Cluj Innovation Days. Cluj-Napoca has built a solid reputation in recent years as one the most important software development centers in Romania and the biggest IT services export center. Cluj Innovation Days and the SBS Forum on ICT standards for SMEs attracted a great number of small and medium business representatives from Romania and other European states including neighbor countries across the EU borders such as Ukraine and Moldova, as well as members of the academia, Romanian local and national decision makers.

E-invoicing and e-identification were the topic for the second SBS Forum. As the EU has set the legal framework for seamless electronic interactions between businesses, citizens and public authorities, the Forum aimed at raising awareness about ICT standards in this field, demonstrating benefits of eInvoicing and e-identification for SMEs, and triggering discussions on advantages and potential difficulties of this initiative.

Moderated by Sebastiano Toffaletti, the Secretary General of DIGITAL SME Alliance, the Forum was driven by five prominent speakers. Having expertise in different sectors, the speakers were able to approach Forum’s topic from diverse perspectives. After introductory remarks and presentation of SBS by Fabio Massimo (SBS Board Member), Irena Rivière, Policy Officer in charge of e-invoicing at the European Commission, and Viky Manaila, Managing Director of Trans Sped, a Rumanian certification service providers, made an overview of EU initiatives on e-invoicing and e-identification, the strategy and objectives, as well as services provided by the European Commission. Meanwhile, Andrea Caccia, chairman of the CEN electronic e-invoicing committee as well as SBS expert on e-signatures, discussed the main benefits of these initiatives. These presentations were followed by practical observations from business representatives – Erik Barna, a local Romanian software entrepreneur from company “Life Is Hard” and Fabio Massimo.

All the speakers as well as participants of the Forum who were actively engaged in the debate agreed that eInvoicing and e-identidication are advantageous for the European SMEs, and are important building blocks of the Digital Single Market. However, there is still a long way to go. First of all, market needs time to pick up with the newest administrative requirements. In addition, implementation of these new standards is not an easy task for the small business, especially until market providers come up with new tools/solutions that would help to implement the new standards. Questions were raised on cost-effectiveness, particularly for the smallest entrepreneurs – while there are no easy and cheap tools to manage eInvoicing in Europe, the smallest market players are less willing to have an additional burden and update their current systems functioning with national standards. Finally, with government agencies being tasked as intermediaries for electronic business-to-business transactions, issues related to privacy and information security were also raised.

One main conclusion shared by the panelists was that the standardization work in support of e-invoicing and e-identification initiatives are key structural elements for the functioning of the Digital Single Market and might be very beneficial for SMEs. However, the practical implementation is still difficult as market players need more time to catch up with the standards and to develop services, such as an EU-wide digital accounting and invoicing solutions, that are still far from being available.

E-invoicing: Interoperability model

Normally, an invoice is considered to be composed of four sections. 1) The Sector Section contains information about a specific industry sector, supply chain or buyers and sellers of a particular type of product. 2) The Country Section covers information about the specific requirements of a particular Member State. 3) The Core Section: Legal Section is comprised of tax and commercial laws and regulations that are common throughout the EU. 4) The Core Section: Common Section – accepted data elements that are not sector or country specific. A typical invoice that is exchanged between a customer and a supplier contain all the four sections. However, various invoice exchanges can interoperate once the core requirements are separated from national and sector extensions. Therefore, new e-Invoicing standards allow to keep the so-called ‘Minimum Core Dataset’. That is, only the core of invoice is left, and information there is sufficient if invoice information is transferred between two different communities in two different legal environments.

E-invoicing: Major milestones

After the European Commission has adopted Directive 2014/55/EU – Electronic Invoicing in Public Procurement, European-wide standardization process has started. A timeline below summarizes this process.

Benefits of eIDAS Regulation (Regulation on electronic identification and trust services for electronic transactions in the internal market and repealing):

Before eIDAS, eSignature Directive ensured technical neutrality, there was no discrimination between electronic and paper documents, but different national implementations were present. Therefore, there was no common policy (=no single market!), no common trust framework, Directive had a limited scope, which did not allow to capture a full potential of digitalisation.

Meanwhile, a new Regulation aims at strengthening EU Single Market by boosting TRUST and CONVENIENCE in cross-border and cross-sector electronic transactions. Also, there are no more different implementations and the new Regulation is applicable in all EU Member States. Legal text is technologically neutral but secondary legislation (implementing acts published by the Commission) mostly has to reference existing standards.

E-invoicing Readiness Checker

The European Commission has set up a tool for Solution & Service Providers and for Public Entities. It helps Public Entities to check their level of readiness to exchange eInvoices in compliance with Directive 2014/55/EU, while the Solution and Service Providers have an opportunity to demonstrate their capabilities in implementing e-invoicing solutions.

European DIGITAL SME Alliance

The European DIGITAL SME Alliance (formerly PIN SME) is the largest network ICT small and medium sized enterprises in Europe, representing about 20.000 digital SMEs across the EU. The alliance is the joint effort of 28 national and regional SME associations from EU member states and neighboring countries to put digital SME at the center of the EU agenda.

The European DIGITAL SME Alliance is a member of UEAPME the European Association of SMEs.